Australian Super CEO hits out at PE fees

Ian Silk, who runs the $46 billion Australian Super fund, said that the concerns he and his colleagues have about fees is also being expressed by some of the large European pension funds.

"Managers are extracting an egregious amount of money. The model has to change. It is not working as well as it should be," he told The Australian. "We have just had a delegation going to Europe for a few days to see some of the big pension funds. They were all saying how absurdly high private equity fees are."

Just 4% of Australian Super's assets under management are invested in private equity, compared to 50% invested in Australian and international public equities, 11% in infrastructure and 10% in property.

Last year Australia's compulsory superannuation system underwent some of the most fundamental changes to its regulatory framework since its inception in 1992. At the heart of the changes was the introduction of legislation that paved the way for a simplified, low-cost superannuation product known as ‘MySuper.'

Trustees of MySuper products will be encouraged to focus on reducing fees which has seen many superannuation funds - until now an important source of LP capital for domestic private equity - reduce their exposure to private equity in favor of less costly alternatives, such as listed equities.

But while many expected fee levels to fall as GPs rush to appease prospective investors, there is limited evidence of this happening, except in the case of newly-created GPs.

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• Topics
• Australasia
• Fundraising
• LPs
• Australia
• Fundraising
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